Commercial and industrial loan portfolios continued to reinflate at the 25 largest banks in the country during the first quarter, according to preliminary data from the Federal Reserve.
But the expansion in business loans at smaller banks slowed, and overall lending across the industry appears to have fallen.
With the release published on April 8, the Fed has posted weekly surveys of bank assets and liabilities covering the first quarter through March 30. If levels held steady for the final day of the period, the nation's 25 biggest banks by assets are set to report a 10.1% annual rate of growth in C&I loans after seasonal adjustments, up from 6.8% in the fourth quarter (see charts).
C&I loans at smaller banks, by contrast, were on course for a 0.4% annual rate of increase after growing at a 1.9% rate in the final three months of last year.
C&I activity has shown some life for several periods now, but the spark has yet to transmit to other sectors. Overall industrywide lending was on track for a 5.6% annual rate of decline in the first quarter, compared with a nearly break-even performance in the fourth quarter.
Industrywide home mortgage portfolios were on pace for an 11.5% annual rate of decline and commercial mortgages were headed down at an 8.4% clip.
Total assets were up, however, as large banks and small banks added to holdings of cash and securities.
Big banks continued to pile on deposits — portfolios were headed toward an annual rate of increase of more than 7% at the 25 largest. The group has generally relied on other forms of funding more than small banks, and the expansion may have been propelled in part by new rules that base deposit insurance premiums on total liabilities and went into effect April 1. At small banks, deposits appear set for a modest contraction for the second consecutive quarter.
In a presentation last month, U.S. Bancorp, which has achieved relatively strong loan growth recently, projected that the pace of expansion in its portfolio would slow from the fourth quarter.
Richard Davis, the company's chief executive, cited seasonal factors and corporate credit-line utilization ratios that remain at rock-bottom levels.
He predicted a gradual process where customers first begin to draw against their deposit balances, then tap more of their credit lines and then seek new loans.
"It's going to take a little while for loans, I think, to pick up some momentum," Davis said.
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